9.10.13: Who needs Keystone anyway?

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Markets: By the numbers

Tuesday’s North American close

TSX
12,825.11 -29.53 -0.23%

Dow Jones
15,191.06 +127.94 +0.85%

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1,683.99 +12.28 +0.73%

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3,729.02 +22.84 +0.62%

Who needs the Keystone XL pipeline anyway? Joe Oliver, Canada’s Natural Resources Minister, arrived on Capitol Hill in Washington, D.C. Monday to stump for TransCanada Corp.’s Keystone XL project. But as the Financial Post’s Jeff Lewis reports, he may be pitching the merits of a pipeline that no longer matters. Analysts at Canaccord Genuity said Monday the project’s $5.3-bilion northern leg “is no longer a necessity” for Canadian oil sands producers, thanks to the sudden rise of crude-carrying unit trains and rival pipeline schemes proposed by Enbridge Inc. “If Keystone does not get approved, the rail capacity is going to be there,” Phil Skolnick, managing director and senior oil and gas analyst at Canaccord, said in an interview. The assessment reflects a deepening sense of indifference toward a project that only six months ago was billed as critical to continued oil sands growth. It comes as TransCanada plans to detail the economic benefits of its $12-billion Energy East pipeline at a press conference Tuesday.

TransCanada Corp. (TSX:TRP) says an independent report predicts the equivalent of 10,000 full-time jobs will be directly supported during the development and construction phase of the proposed Energy East pipeline to New Brunswick. Energy East is expected to take six years to complete, supporting 2,300 jobs from now through 2015 during the development phase and 7,700 jobs during the construction phase between 2016 and 2018, according to estimates prepared by Deloitte & Touche and released Tuesday by TransCanada. The study says there will also be 1,000 full-time jobs supported by the $12-billion pipeline once it begins service after 2018. TransCanada has proposed the Energy East project to deliver crude from western Canada as far east as Saint John, N.B.

As discussions that will determine the future of BlackBerry Ltd. continue behind closed doors, a new round of workforce reductions has occurred at the embattled Canadian technology giant. Recently, the Waterloo, Ont.-based company laid off 60 members of its sales force. The members of the sales force were based in Canada, but focused on sales operations in the United States. “We are moving a small number of U.S.-focused sales roles that were based in Canada to the U.S. to be more closely aligned with our customers,” a spokesperson for BlackBerry told the Financial Post in an email.

Housing starts fall

Canada Mortgage and Housing Corp. says the pace of housing starts was down in August compared with the previous month, but remained within the forecast range. The monthly seasonally adjusted rate fell to 180,291 units last month, down from 193,021 in July. The six-month average also dipped to 187,197 units in August from 187,324 in July. Housing starts in urban areas fell by 5.8% from July’s level, mostly because of fewer multiple-unit projects such as condos or apartments, the Ottawa-based federal Crown corporation reported Tuesday. “The trend in total housing starts continued to be relatively stable for a sixth consecutive month, remaining within a narrow range of roughly 182,000 to 188,000 units since March 2013. This is in line with our forecasts,” said Mathieu Laberge, CMHC’s deputy chief economist.

China’s economy is back firing on all cylinders

Stronger-than-expected industrial output reinforced other signs that China’s economy was stabilizing after slowing for more than two years, just as major emerging markets brace for potential fallout from an expected trimming of U.S. stimulus. Factory output growth hit a 17-month high and retail sales grew at their fastest pace this year in August, increasing confidence that after contracting in nine of the past 10 quarters, the world’s second-largest economy may be regaining some momentum. But any recovery is set to be bumpy. China’s leaders have made it clear they can accept slower growth as they try to wean the economy off a dependence on investment and exports in favour of domestic consumption. And investors are worried about how emerging economies will fare when the U.S. Federal Reserve tapers its monetary stimulus, possibly as soon as next week, although analysts say China is better positioned than others to cope with capital outflows.

CPPIB bets on luxury

Another U.S. luxury retailer is coming to Canada, sort of. Canadians won’t be able to shop at local outlets of Neiman Marcus or Bergdorf Goodman any time soon, but they can soon claim a piece of the storied luxury retail through our national Canada Pension Plan, reports the Financial Post‘s Barbara Shecter. The Canada Pension Plan Investment Board secured its first large private deal in more than a year on Monday with partner Ares Management LLC to purchase U.S. luxury retailer Neiman Marcus Group Ltd. for US$6-billion. The “iconic” brands in the Neiman stable, including Bergdorf Goodman, caused the Canadian pension fund to take a “hard look” and ultimately to prevail over competitors, said André Bourbonnais, senior vice-president of private investment at CPPIB. “These iconic brands don’t really come on the market very often,” he said in an interview Monday. The CPPIB has walked away from a number of potential deals over the past year because competition was driving up prices, Mr. Bourbonnais said.

The long-suffering shareholders of Gabriel Resources Ltd. two weeks ago received a brief glimmer of hope — a hope that now appears to be extinguished, reports the Financial Post‘s Peter Koven. Shares of the Canadian miner plunged an astounding 53.7% to close at 68¢ on Monday after Romanian Prime Minister Victor Ponta reversed course and said the company’s giant Rosia Montana project should not go ahead. At one point, the stock was down as much as 72%. While Mr. Ponta’s comments do not mark the end of Gabriel’s quest to build Rosia Montana, which could become Europe’s biggest gold mine if it is ever approved, the response from investors on Monday shows many of them have had enough of this saga. Gabriel has been trying to win approval for the project since the late 1990s, but has faced vicious opposition from anti-mining activists along the way. The company battled back — it even helped fund a documentary called Mine Your Own Business, which portrayed the activists in a very negative light and suggested the mine is needed to create economic activity in an impoverished part of Romania.

The proverbial conversation Verizon Communications Inc. entering the Canadian market may be dead, but the noisy chatter over the future of the wireless industry continues, reports the Financial Post‘s Christine Dobby. BCE Inc., one of the big three telecommunications firms behind the summer public relations campaign against Verizon and the government’s rules on the sector, has joined rival Telus Corp. in launching legal actions against Ottawa. In a handful of legal challenges, BCE and Telus target changes to government policies made earlier this year and argue the industry minister did not have the authority to change the rules of play part way through the game. On the other hand, a group of 35 Canadian entrepreneurs have penned an open letter to Industry Minister James Moore urging the government to go even further than it has to promote competition in the wireless industry. The group, spearheaded by consumer advocacy organization OpenMedia.ca, argues the government should reclaim unused wireless spectrum — airwaves bought in a 2008 auction that were never deployed to build a cellular network — and resell it to a new entrant to keep it out of the hands of the industry’s incumbent players.

Fairfax Financial Holdings Chairman Prem Watsa is reportedly closing in on a rescue deal for BlackBerry. The Sunday Times reported on Monday that Watsa has assembled billions of dollars in backing from the Canada Pension Plan Investment Board. Other Canadian pension funds are also expected to back Watsa’s bid, the Times says, citing unnamed banking sources. Fairfax is BlackBerry’s largest shareholder, with a 10% stake. Watsa stepped down from the BlackBerry board in August, citing a potential conflict of interest when the company said it was exploring the sale of itself and other options. His resignation prompted speculation that the investor, known as the Canadian Warren Buffett, was mulling a bid for the company.

Empires fall, seasons change, and, with similar clockwork certainty, Apple Inc. is announcing its latest iPhone today – or more accurately, iPhones, reports the Financial Post‘s Matthew Braga. The special event – which you can watch, live, via online video, or join us via FP Tech Desk’s live coverage – is expected to feature not just one, but two new devices, an Apple first for a new iPhone event. It’s a marked shift in strategy for a company that traditionally unveils just a single new phone each year. Keep reading to find out what to expect.

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